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Frequently
Asked Questions
What
is the role of a Clearinghouse?
The role of a clearing house is to guarantee the financial obligations
of every contract it clears. This is achieved by the clearinghouse
acting as the buyer for every seller , and the seller for every buyer.
Therefore a member who has bought or sold a futures contract, has
an obligation not to the party on the other side of the transaction,
but to the clearing house, just as the clearing house has an obligation
to the member.
What
role does the Canadian Derivatives Clearing Corporation play in Canada’s
financial markets?
The Canadian Derivatives Clearing Corporation (CDCC) is the issuer,
clearinghouse, and guarantor of exchange-traded equity, index, currency and interest rate derivative contracts traded in Canada.
What
products does the Canadian Derivatives Clearing Corporation clear?
CDCC
clears all derivative contracts - interest rate, index, currency and equity - traded
on the Montréal Exchange: options, futures and options on futures.
What
are the trading hours for the products that CDCC clears?
Equity
derivatives
Index
derivatives
Currency
derivatives
Interest
rate derivatives
What
margining system does CDCC employ?
CDCC
maintains two risk-based portfolio margining systems. From 1990 to
1997, the Theoretical Intermarket Margin System (TIMS), first developed
by the Options Clearing Corporation, was the only margining methodology
used by CDCC. In March 1997, CDCC augmented the margining process
with the implementation of the Standard Portfolio Analysis of Risk
(SPAN) system developed by the Chicago Mercantile Exchange. In April 2006, CDCC made major changes within its systems to make SPAN CDCC’s margining system of choice.
What
internal controls are in place at CDCC?
A comprehensive internal control program is in place at CDCC to ensure
the integrity of all margin, operational, financial and information
systems. CDCC personnel carry out regular self-assessments of compliance
with controls on trade processing and settlement, the margin system,
information technology, and accounting. CDCC’s auditors test
the operation of these controls on a continuous basis, and report
regularly to CDCC’s Board of Directors. The auditors also provide
an opinion, on an annual basis, as to the suitability of the control
procedures to achieve CDCC’s stated internal control objectives.
The report containing this opinion is available to the public.
The
objectives of this report is to highlight those key internal control
procedures with respect to the clearing, assignment and exercise
of derivative contracts traded on the Bourse de Montréal;
the collection and safeguarding of margins with respect to derivative
contracts; and the administrative and information technology processes
that support them.
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